The art is not watered down, the people are.
As Bruce points out, the dojos of old were filled with full time student warriors. These students were expected to live and breath the art the were studying all the time and stoicly eliminate all outside influences from their lives.
Now the vast majority of MA students practice as much as they can within the scope of full-time plus careers, family and other pastimes. Gone are the days when days of begging outside a dojo door were required for entrance and slavish devotion to a teacher mandatory.
Even if you have a "samurai" career (Law Enforcement, etc), as I do, you would be regarded as quite squirlely if you devoted your self to a life as a "warrior monk" (somepeople will always regard as squirlely just for practicing MAs).